can someone explain to me why leverage can kill your account again? simple explanation.

For instance: 1:1000 leverage.

You got USD 10 in your account, by using USD 1 of margin buying USD 1,000 worth value of Fiat Currencies.
If your holding USD 1,000 value only worth USD 990, it wiped out your account.

Your balance USD 10 with 1:1000 leverage, you can buy USD 10,000 worth of value fiat currencies.
If USD 10,000 you are holding fall to USD 9,990, it wiped out your account.

Simple Money Management Structure:

You have USD 1,000 account with 1:100 leverage.
You need USD 119 of margin requirement for 0.1 STD LOT on EUR/USD.

If you BUY EUR/USD on 0.3 STD LOT, you have to use approximately 33% of your account balance, or USD 327 of your account balance as margin requirement.

If you put 30 pips SL on this trade and the trade don't work out, it means you have a loss of USD 90 of your account equals to 9% of your account balance.

Conclusion:
Many amateur didn't calculate by using this simple money management structure. In 1:100 leverage account, you are using only 33% of your account balance as margin requirement with 9% risk of your whole account balance in a single trade, especially they love 1:1000 leverage account. You can execute 2 more position with 1:100 leverage, in other hand you can even execute another 29 exact position with 1:1000 leverage. If 3 position is 27% risk of your account balance, how many risk you are taking with 29 position? Calculate yourself.

P/S: No doubt it is so syiok for winning 1,000 pips. By the time of dreaming to profit 1,000 pips, they forget how important is 30 pips.

This post has been edited by hotfxmy: Apr 11 2015, 05:53 PM

srry might be a lil bit redundant, what u mean is if i have 100 usd, i can use it to buy 10000usd or more size of volume? and then if somehow my investment is not working so well, and if it become -100 usd it will wipe my account?

i thought i can hold it forever

is there somehow any chance that i can hold my investment forever? 1:1 leverage?

This post has been edited by beyd: Apr 11 2015, 05:58 PM

still tak paham sifu. means if i use 1:1000 leverage via usd10, i have so called virtual usd1000? so if total account of virtual usd1000 become usd900 then KO?

if you got the money the best of cos no leverage la.

It depends on 1:? you use on USD 100 account. Basically (1) = Your money : = (multiply) 1000 = Finance Fund.
If 1:1000 = ( USD 100 x 1000 = USD 100,000). That means you are using USD 100 as collateral to finance worth value of USD 100,000 fiat currencies.

Of course you can hold your investment forever with 1:1 leverage. That's how money changer works, and that's how foreign billionaire invest in Forex.

yep i believe if the loss value of ur invest is bigger than ur actual value then it is cleaned, based on ur expanationn ur account will be wiped if it reach usd990 because ur actual account values is usd 10 only.

so what i understand is.. leverage is OP indeed for ppl with the right hand, and very confident that market will go their way. e.g if they`re sure that market will go up, they can enlarge their profit.

one more thing though?... we are cleanead if goes below our account valued but if we manage to get profit from the leverage... is it base on the value that we leveraged it? e.g my accaunt is usd 100 go for usd10,0000 and somehow makes profit...how`s the profit counted??

teach please?

Alamak, it is not virtual. You give USD 10 as collateral, and you can finance USD 10,000 worth value of fiat currencies. Therefore, if the market value of USD 10,000 became USD 9,990, then your collateral burnt, means you have no money, so give me back the USD 9,990 I borrow to you and get out of my sight.

This post has been edited by hotfxmy: Apr 11 2015, 06:51 PM

Nope. Have you play Blackjack before? You bust and you are out, no matter what the banker card is. Even the banker bust later, they won't pay you back. That's the edge side to the market, instead of you.

srr lel..somehow i get the point after few time read it..xD

This post has been edited by beyd: Apr 11 2015, 10:40 PM

somehow i manage to read some of the meaning on leverage on the net. I am not sure if i get it correctly about leverage that IB gives you and the leverage that you trade per how much you have in your account.

still not sure what is margin though

All sifu please guide me thanks

from usd40 to usd150? in 16 trade..wew....look`s like u were having a good time though...

is it real account or demo?? what broker do u use?

i`m not sifu btw...

Leverage are given by Broker instead of IB. IB is a short form for introducing broker. They earns commission by introducing you to trade with their broker.

Margin refer as a collateral of your financing to fiat currencies. The higher leverage you have, the lower margin you need. It is a double edge sword. The higher leverage you have, the exposure of your account risk are much more higher.

its real account boss...dont have time actually trade after 11 pm...because im working 12hours from 10am to 10 pm...
but still learning...using fxprimus

This post has been edited by zamnrul: Apr 12 2015, 11:32 AM

Basically, I am not sifu and just ikan bilis.. Secondly, you can't expect someone to guide you with on 16 trades of result. You need a badge of at least 100 to 500 trades as reference or back test the figures and accuracy of your trading strategy. This is also why in myfxbook, they require their signal service provider with certain period of trading and certain amount of trades to refer as a consistency and quality provider. But anyway, still a good results with only 16 trades.

last year im actually loss around rm8k...around 3 months im not trade forex....last week start back and try to improve my trade...hope all can share how to get consistent in trade.

sifus here if daily make 25 pips daily for 15 days in a month and for 25months.. they oso can achieve 10000pips..

those claim 1000++ in 1 week oso can achieve it sooner...


of course ppl say its no right or wrong... but to me... i dun stay long to risk on for MM..


one chf crisis.. byebye

Anyone heard Maxim Trader?

u must be playing swing intraday and with small lots....leaving setting for TP n SL with 50pips -100 pips?

this is just a 50-50 chances... dun treat this as bench mark.. it wont b accurate

All I can say is jaga2. Don't get seduce by Lamborghini, Ferrari and Maserati.
Don't ask me more.